1、 Overview of Core Data
| Gamma-PGA (gamma polyglutamic acid) |
Since March, the price of propylene has started a unilateral upward trend. As of March 10th, the benchmark price of propylene in Shengyi Society was 8817.67 yuan/ton, a significant increase of 37.54% compared to 6411.00 yuan/ton at the beginning of March. The price has shown a linear upward trend, and the market spot is tight, with high price transactions becoming normalized. Downstream demand mainly follows suit.
2、 The core logic behind the rise in propylene prices in March (driven by both Middle East geopolitics and domestic supply and demand)
1. Geopolitical risks in the Middle East:
As a core production area for crude oil and propane globally, as well as an important exporter of chemical products, the Middle East continues to ferment in this round of geopolitical conflicts, becoming a key external driver for the surge in propylene prices.
On the one hand, international crude oil and propane prices have risen significantly due to the geopolitical situation, and propylene, as the core product of refining and propane dehydrogenation, has seen a rigid increase in raw material costs, providing underlying support for price increases;
On the other hand, the shipping risks of key waterways such as the Red Sea and the Strait of Hormuz have intensified, and the expected arrival of imported propylene at ports has tightened, resulting in increased transportation costs. Coupled with disruptions in the supply of chemical plants in the Middle East, market concerns about supply gaps have intensified, and the risk premium has significantly pushed up propylene prices.
2. Supply side:
The centralized maintenance of domestic propylene enterprises’ facilities has been implemented, and some facilities are operating at reduced loads. The effective supply in the market has significantly decreased, and the tight situation of spot resources has become prominent. Against the backdrop of restricted import supplementation, the contraction of the domestic supply side further exacerbates the supply-demand imbalance, becoming the internal core support for rapid price increases.
3. Demand side:
Downstream major industries such as polypropylene and epichlorohydrin continue to operate normally, with solid support for essential procurement. Downstream enterprises passively accept high priced sources of goods; Combined with strong bullish expectations in the market, the combination of essential purchases and moderate inventory replenishment has formed a sustained buying force, driving prices to continue to rise. As of March 10th, the benchmark price of Business Society PP (wire drawing) was 9126.67 yuan/ton, an increase of 36.97% compared to the beginning of this month (6663.33 yuan/ton).
As of March 10th, the benchmark price of epoxy propane in Shengyi Society was 10516.67 yuan/ton, an increase of 31.46% compared to the beginning of this month (8000.00 yuan/ton).
3、 Future prospects
In the short term, there is still uncertainty in the geopolitical risks in the Middle East. The cost support of crude oil and propane has not dissipated, and the tight supply of domestic propylene is difficult to alleviate in the short term. Downstream demand continues to follow up, and propylene prices are likely to remain high, with intensified high-level fluctuations.
Special attention should be paid to the evolution of the situation in the Middle East, the arrival of imported propylene at ports, and the progress of domestic plant restart. If geopolitical sentiment eases and supply recovers, there is a risk of high price correction.
IV. Summary
The 38% surge in propylene prices in March is the result of cost and import disruptions caused by Middle Eastern geopolitical risks, coupled with domestic supply contraction and downstream demand follow-up. The market presents a strong trend driven by cost and supply-demand mismatch, and the subsequent geopolitical situation and supply recovery progress will dominate the price trend.
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